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EDF to speed up Europe takeovers

PARIS — Électricité de France, the world's largest power company, said Thursday it may accelerate acquisitions in Europe after its profit doubled in 2005.

EDF will invest €26 billion, or $31 billion, in Europe in the next three years, including as much as €8 billion on acquiring other companies, it said. Profit rose to €3.2 billion last year, from €1.6 billion in 2004, the Paris-based company said.

"Things are speeding up; we're not going to be waiting forever" to expand, the finance director, Daniel Camus, said.

EDF's chief executive, Pierre Gadonneix, aims to add to acquisitions the company made last year in Italy and Switzerland to compete with rivals likeE.ON in Germany, as Europe's energy markets open. E.ON this week offered €29.1 billion, including assumed debt and provisions, for Endesa, the largest Spanish power company, in a deal that would make it bigger than EDF.

"A race for size has begun," said Pedro Real de Asúa, of Barclays Fondos in Madrid. "E.ON's offer puts pressure on everybody who wants to be at the front of Europe's energy markets, including EDF and Enel. Companies that are present in some countries, but aim to be in all markets, will have to make steps now."

Shares of EDF closed up 64 cents at €42.47 in Paris.

"We're not surprised about E.ON's bid; it's part of the industry consolidation," Camus, the finance director said in an interview. "EDF is the largest utility, with or without E.ON's transaction. E.ON is a challenger and will remain a challenger."

The French company plans to invest mainly in the countries where it operates, including France, Germany, Italy and Britain, Gadonneix said. It will consider new markets including Spain and Belgium, he added.

The "first priority is to develop investment in the countries where we operate," Gadonneix said. "Europe is a priority. No options will be excluded or set aside." The company does not have "specific plans" in Spain, Camus said.

John Honoré, an analyst at Société Générale in Paris, said, "Growth is mainly coming from the rest of Europe, mainly in Germany, where the company is benefiting from high wholesale market prices."

Full-year earnings before interest, taxes, depreciation and amortization rose by 3.6 percent to €13 billion, helped by improved efficiency, the company said. Debt fell by 8.6 percent to €18.6 billion from €20.3 billion, after the company's stock offering last year. Gadonneix reiterated the company's goal to increase these earnings by 3 percent to 6 percent a year from 2006 to 2008.

Separately, Gadonneix said in the financial daily Les Échos that he did not rule out selling the utility's stake in Arcelor, the Luxembourg-based steel giant that is the subject of a hostile takeover bid by Mittal Steel. Gadonneix said he regarded Arcelor as purely a financial investment.$@

RWE isn't buying, for now

The German utility RWE promised stronger earnings growth this year and refuted speculation that it would soon follow its rival E.ON in making acquisitions, Reuters reported from Essen, Germany.

RWE posted a 4.4 percent increase in 2005 net profit on Thursday, buoyed by sustained strength in power and natural gas prices. But analysts said the outlook was for a smaller increase in operating profit than they expected, helping to lowerits shares.

The chief executive, Harry Roels, said the company would not rush into acquisitions, although he said it was well qualified to compete in the next round of utility consolidation in Europe.

"There's much more money available than there are acquisition targets," he said.